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Prices and farmer investment

Evidence from experimental studies









FAO & IPA. 2022. Prices and farmer investment – Evidence from experimental studies. Investment brief. Rome, FAO.



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    This study analyses the impacts of titling on tenure security, property value, access to credit, and household investments in the departments of Nueva Segovia, Jinotega y Chinandega, which are covered by Nicaragua’s Land Administration Programme (PRODEP). The programme has been in operation for over two decades, prioritized and sustained by the national government, International Financial Institutions, and other donors, targeting the poorest and most vulnerable households. Using quasi-experimental econometric techniques, namely propensity score techniques, and instrumental variables, we find that titling obtained through PRODEP, either individually or jointly, has significantly contributed to an increase in beneficiaries’ perception of both land tenure security and increased land value. We also find that the perception of an increase in owners’ land value was higher for women covered by the later phase of the program. While the overall findings are encouraging, we suggest that potential investments in land and housing by landowners be further enhanced through strengthening synergies with complementary programmes for local economic development, housing, and poverty reduction.
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    Understanding to what extent and speed agricultural commodity price changes on international markets are transmitted to consumers is key in assessing the vulnerability of households to price shocks. The importance of these transmission measures is compounded, in developing countries, by the fact that consumers tend to spend a higher proportion of their income on food items. Regional estimates of food inflation transmission can also be used to predict consumer-level impacts of international price shocks, contributing to improve the information basis on which to base policy mitigation actions and to focus on the areas likely to suffer the most. The aim of this paper is to provide measures of the transmission of price changes from international commodity markets to consumers in different regions of the world, using monthly data from FAO’s Food Price Indices and Regional Food Consumer Price Indices. This econometric analysis, which uses impulse response functions from error-correction mode ls, is useful in establishing typologies of regions with respect to the extent and speed of price transmission processes.
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    This study examines the FAO cash plus agriculture program in Somalia. This multi-faceted intervention provides agricultural inputs, training and cash transfers to vulnerable agro-pastoralist households living in districts and villages that experienced severe weather shocks. We exploit variations in the implementation of this program to assess the effect of receiving inputs only and inputs plus cash on a range of protective and productive outcomes. Specifically, we make use of household survey data collected in 2019 and apply a quasi-experimental Inverse Probability Weighted Regression Analysis (IPWRA) matching approach to estimate the impact of the two different interventions on food security, assets, adoption of inputs and adoption of agricultural practices. We find positive and significant impacts on a number of productive outcomes and some difference between the two treatments: while inputs seem to increase asset wealth, cash plus reduces food insecurity and higher levels of income diversification, suggesting that the cash component facilitates investments in livelihoods diversification. Moreover, we find evidence of heterogeneous impacts under conditions of weather shocks, and between socio-economic segments of the population.

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